The Makings of a Great Small Business 401(k) Plan
If you’re thinking of starting a 401(k) plan at your business, check out these six tips to help you choose set one up that helps you and your employees.
If you’re thinking of starting a company 401(k) plan, you know that your employees will be counting on you to make important decisions that will impact their ability to achieve their retirement goals. Follow these six tips to make sure you and your employees get the 401(k) plan you deserve along with the personalized support you need for successful retirement planning.
1. Choose a 401(k) Provider Focused on Small Business
Providers focused on serving smaller businesses better understand the kind of support small business owners require from a partner and they’ll be less likely to be distracted by larger accounts.
2. Look for Customizable Investing Options
If your employees have a range of investment know-how, from those who want help to those who want independence, it’s important your 401(k) plan doesn’t only offer a one-size-fits-all approach.
3. Know What You’re Paying For
The fees charged by service providers should not be hidden or difficult to understand. Make sure your fees are clearly outlined so that you don’t pay more than you should for your 401(k) plan.
4. Delegate Some of Your 401(k) Management Responsibilities
You may be personally liable under ERISA for failing to act in the best interests of your participants. And not all types of financial advisers are allowed to assume this liability on your behalf. Service providers that are 3(38) Investment Managers allow you to delegate your liability for choosing the fund lineup, which is a great way to reduce your personal risk.
5. Have a Plan for DOL or IRS Audits
Your plan may never be audited. But if it is, wouldn’t it be great to be prepared ahead of time? Look for service providers that have a defined strategy for helping you get your documents in order so you can be ready for an audit.
6. Insist on a Service Level Guarantee
Your employees deserve more than an annual enrollment e-mail. Make sure your service provider provides one-on-one, in-person enrollment (which can increase employee participation rates) and retirement planning guidance to your employees. Better yet, your employees should have a single point of contact at your plan service provider to answer questions and provide support. This is where providers that focus on small businesses shine.
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